Dell plans more cost cuts as Q4 profits tumble
Published: 27 Feb 2009 16:40 GMT
Dell's profit sank drastically during the final quarter of 2008.
The PC maker reported fourth-quarter revenue of $13.4bn (£9.3bn) Thursday, a 16 percent drop from $15.9bn reported the same quarter a year ago. Dell's profit for the quarter totalled $351m, or 18 cents per share, compared to $671m and 31 cents per share the year before, nearly a 48 percent drop in profit. Analysts had been anticipating earnings per share of 26 cents.
Dell reported last month that it would be forced to take a pre-tax charge of $280m, 11 cents per share, related to cost-cutting and restructuring measures taken during the quarter.
The company continued to quote the 'challenging' global environment and the reduction in IT spending by large corporate customers, a key segment for Dell..
Many of the company's customers began to defer spending starting in the summer, and it "continued to deteriorate through the second half of the year", chief financial officer Brian Gladden said during a conference call with reporters. "We expect continued weakness during the current quarter."
Gladden tried to keep the focus on the company's progress on cutting costs. Dell cut operating expenses by 16 percent, or $363m, during the fourth quarter.
He also said there would be more to come. Gladden said the company will be able to take $4bn of costs out of its budget by 2011, up from the previous goal of $3bn announced last year. The costs will come from reducing manufacturing and supply chain costs, as well as operating expenses. When asked if that included more job cuts, Gladden declined to exclude that possibility. It is "not just labour, not just people", he said.
Although Dell shipped 18 percent more consumer PCs for the quarter, revenue dropped 17 percent as consumers choose cheaper notebooks and netbooks. The full year was an improvement on 2007 — revenue increased 11 percent to $11.5bn.
Dell's stock dropped 2.3 percent to $8.02 per share in after-hours trading.
Credit: Dell's profit falls almost 50 percent from CNET News
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